As part of your year-end payroll processing tasks, you might have a question or two about reporting minister's earnings and allowances on Form W-2. Maybe, you just need a refresher. Here are the general topics that we receive questions about.
Salary – Salary paid to minister is reported in Box 1.
Federal Withholding – May or may not be zero. Ministers are exempt from withholding requirements but may elect to have withholding. Enter the amount withheld.
Social Security, Social Security Withheld, Medicare, and Medicare Withheld – Ministers are considered self-employed for purposes of Social Security and Medicare taxes so these boxes are blank.
Housing & Utility Allowances – Should be reported in Box 14. Remember that housing and utility allowances should be officially designated by the church in advance.
All other boxes on the W-2 are generally the same for ministers and non-minister employees.
The IRS has an example of a Minister's Form W-2 in its Publication for Clergy and Religious Workers. See it at …
http://www.irs.gov/pub/irs-pdf/p517.pdf
Also, there is a good IRS Publication for Churches and Religious Organizations that cover a variety of tax issues. Check it out at …
